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The Ultimate Stocking Stuffer: Stock

Christmas Piggy Bank

As the holidays draw closer and you still need to decide what to get the tweens and teens on your holiday list, consider buying the brands behind the products in their lives. It isn’t as “old school” as you may think.

The Gift That Keeps Giving?

It used to be that giving stock meant choosing between a clever way of wrapping up a brokerage or mutual fund account statement or going through the process and expense of having shares physically issued for presentation. While there are firms that can help you get physical certificates—even framed ones to give as gifts—selling those certificates later can end up costing more than the value of the entire investment. It also requires time and planning since you need the recipient’s Social Security number and full name, as well as that of their guardian (if the recipient is a minor). It also tends to mean a hefty dollar commitment, given that you need to buy full shares.

An Off-the-Rack Solution

A firm called Stockpile, however, has found a way of making these gifts more tangible, understandable, and available for any budget by issuing gift cards convertible into shares—and fractional shares of publicly traded shares. For instance, instead of giving a $25 iTunes® gift card, you can box and wrap a card representing a $25 investment in Apple® itself.

The range of card options available in retail stores tends to include the brands behind the products kids and young adults crave. Online gift cards expand that range to include other firms across multiple industries, from banking and real estate to home goods and restaurants.

Like a gift card for merchandise, the recipient goes online to “register” the card, though, in this case, they are registering for a discount brokerage account that will hold their shares. After opening the account, the shares (or fractions of shares) are purchased and placed in the account. As more gift cards are received, they may be added to the same account. The recipient can keep the shares in this account or sell them and buy other company shares in their place. Currently, Stockpile has no direct competitors. Curiously, one of its largest investors is a division of Fidelity Investments.

Fees vs. Benefits

There are cheaper ways to invest. However, they require larger minimum balances and shareholdings. For someone who wants to get children interested in investing, Stockpile’s approach gives them exposure to the basics and can, by default, teach them a key element to being a successful investor: diversification. With a minimal investment, especially after a few gift-giving occasions, they can potentially own a well-rounded, diversified portfolio, as evidenced by the pile of colorful company gift cards they’ll collect.

The idea of children developing an understanding of investing with lifelong benefits is not unreasonable. Consider how easily they pick up the rules for Pokémon©. Stock investing is much simpler, and when done early and consistently, it can potentially help them pay for college or even a down payment on their first home.

How low will your payment be?